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Load Testing Fails Facebook IPO for NASDAQ

Are you load testing? Great. Are you counting on load testing to protect your organization from a catastrophic system failure? Well, that’s not so great.

I bet if you surveyed enterprise application development teams around the world and asked them how they would ensure the elasticity and scalability of an enterprise application, they’d answer (in unison, I’d imagine): load testing. Do it early and often.

Well, that was the world view at NASDAQ before the Facebook (NASDAQ: FB) IPO — perhaps the highest profile IPO of the past five years. And we saw how well that worked out for them. NASDAQ has reserved some $40 million to repay its clients after they mishandled Facebook’s market debut. But it doesn’t look like it’ll end there. Investors and financial firms are claiming that NASDAQ’s mistake cost them upwards of $500 million. And with impending legal action on the way, who knows what the final tally will be.

If ever there was a case for the religious faithful (like me) of application quality assessment to evangelize that failure to test your entire system holistically has a high potential cost, here you go. NASDAQ has hard numbers on the table.

NASDAQ readily admitted to extensive load testing before the iconic Facebook IPO, and it was confident, based on load test results, that its system would hold up. It was wrong, because its test results were wrong. And the final result was an epic failure that will go down in IPO history (not to mention the ledger books of a few ticked-off investors).

Now, I’m not saying that you shouldn’t be load testing your applications. You should. But load testing is something that happens at the later stages of your application development process, and before the significant events you are anticipating might cause a linear or even exponential increase in capacity demands to your website or application.

However, load testing gets hung up in its prescriptive approach to user patterns. You create tests that assume prescribed scenarios which the application will have to deal with. Under this umbrella of testing, the unanticipated is never anticipated. You’re never testing the entire system. You are always testing a sequence of events.

But there is a way to test for the unexpected, and that’s (wait for it) application quality assessment and performance measurement. If NASDAQ had analyzed its entire system holistically in addition to traditional load testing, it would have (1) dramatically reduced the number of scenarios it needed to load test, and (2) figured out which type of user interaction could have broken the application when it was deployed.

Application quality assessment goes beyond the simple virtualization of large user loads. It drills into an application, down to the source code, to look for its weak points — usually where the data is flying about — and measures its adherence to architectural and coding standards. You wouldn’t test the structural integrity of a building by jamming it with the maximum number of occupants; you’d assess its foundations and its engineering.

NASDAQ could have drilled down into the source code of its system and identified and eliminated dangerous defects early on. This would have led to a resilient application that wouldn’t bomb when the IPO went live, and would have saved the company the $40 to $500 million we’re estimating it’s exposed to now for its defective application.

At the end of the day, quality assessment can succeed where load testing can, and has, failed. Had NASDAQ considered software quality analysis before Facebook had gone public, there’s a good chance it would still have $40 million burning a hole in its pocket. However, our friends at NASDAQ load tested how they thought users would be accessing their systems, then sat back in anticipation of arguably the most anticipated IPO in recent history. Little did they know they would be the ones making headlines the next day.